Vietnam:
New Cyber-Security Draft Decree – Better But The Show Goes On

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In October, we reported on a first draft decree to implement the
Cyber-security Law and noted many concerns about its overtly
stringent terms and, in particular, the threat it caused to
development of a thriving e-commerce/ Industry 4.0 landscape. Since
then, the business community, among others, have been vocal on the
shortcomings of the draft and offered up many comments and
suggestions to address concerns. With the release of a new draft
early Novembers, it appears that the Ministry of Public Security
(MPS), the decree's authors, have listened.

The first clue is in the length of the new draft: cut
dramatically in size from 66 clauses to just 30, it necessarily
doesn't cover as much ground as the first draft. But the devil
is always in the detail and, although the new draft is considerably
less complex, particularly when it comes to issues affecting
e-commerce, a close look reveals there are still areas worthy of
further advocacy.

The question we have been asked most frequently is whether the
Cyber-security Law itself, and its impending decree, govern every
company on earth accessible over the Internet to Vietnam-based
users. Taking the language of the "old" draft at face
value, the answer was a clear affirmative, resulting in
consequences both unreasonable and unnecessary to impose as well as
impossible to enforce in practice, notably an obligation to
localize data and establish commercial presences. The new draft
takes a much more balanced and practical approach and suggests that
a far more limited number of companies will be subject to these
requirements in practice. In particular, these key obligations look
set to only apply to companies (whether local or international)
which meet allof the
following conditions:

collecting, exploiting, analyzing,
and processing the data of Vietnamese users (see below for what
amounts to "data");

allowing its users to conduct
activities prohibited by Articles 8.1 and 8.2 of the Cyber-security
Law (i.e. – key Internet-based wrongdoings such as libel,
anti-government propaganda, financial fraud etc.); and

committing wrongdoings covered by
Article 8.4.a of the Law [this appears to be a typo as there is no
such clause in the Law] or Article 26.2.b of the Law (this obliges
companies to prevent sharing of and delete certain kinds of
"wrongful" information within 24 hours of receipt of a
request from the Vietnamese authorities).

While criterion (1) is still very broad, it at least removes
from the scope any and all companies that had service-offering
websites accessible by Internet from Vietnam (such as our
hypothetical Irish bank in our October blog post). Still, many
other tech companies such as Amazon, Agoda, Google, Facebook etc.
would fall squarely within one or more categories covered there.
However, this is just the top of a funnel: even is a company fits
within criterion 1 (and therefore almost certainly criterion 2)
they will not automatically be required to localize data or
establish commercial presences in Vietnam. Following approaches of
other jurisdictions to assess and handle based on risk and conduct,
such companies will only be required to take such steps if they
fail to comply with what the Cyber-security Law expects them to do
(read: cooperate with the government). It is good for business as
now they can decide to cooperate and avoid strict monitoring
rules.

Apart from this new and more tolerant
"co-operate-or-comply" philosophy, the data which
companies may need to store in Vietnam is also watered down
slightly. The list now "only" covers information which
can help identify users (i.e. – names, nationalities,
occupations, residency, contact information, ID/passport numbers,
credit card numbers, health records, biometrics) and other
user-created data (i.e. data which users choose to upload, friend
lists, groups users join or interact with). Data such as
"philosophical belief" or "political views" are
no longer covered in the new draft decree.

As ever, there is some bad with the good. The new draft seems to
double down on granting power to the MPS to proactively examine the
information systems of companies in Vietnam where it suspects
wrongdoing. There is little or no due process involved in such
cases.

In conclusion, the MPS has clearly taken on board much of the
advice and criticism received following the broad and unworkable
first draft decree and this is good news. Whether this will
ultimately be reflected in the final decree however still remains
to be seen.

For more information about the Cyber-security Law in Vietnam,
please contact Giles at GTCooper@duanemorris.com,
Le Hau at HNLe@duanemorris.com. Giles is co-General Director of
Duane Morris Vietnam LLC and branch director of Duane Morris'
HCMC office.

Disclaimer:This Alert has been
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